Such are the principal conditions of the joint-stock Banking law, which has now been sixteen years in force without undergoing material change. As I proceed I shall have to enter upon an examination of the operations carried on under its authority, and to consider in detail the faults and merits ascribed to the wide spread system it has given rise to. That being the case, I shall do no more here than express upon a general view of the subject, the opinion I have long deliberately entertained; which is, that so long as these Banks are made to rest upon the broad and plain foundation originally prepared for their superstructure, the public cannot but enjoy greater security in them, than in any other monetary establishments hitherto devised or undertaken for its accommodation.

It is not a little singular that the Bank of England manifested extreme discontent when called upon to spread branches of its own throughout the country. The directors yielded to the importunity of Lord Liverpool's government, in this respect, not without strong and repeated remonstrances against what they did not hesitate to pronounce the impolicy and disadvantages of the innovation. They now, however, appear to be much attached to their branch Banks. Altogether ministers were not very fortunate in gaining friends for their measure. They had no sooner appeased the anger of one complaining body, than they were assailed by fresh reclamations and remonstrances from others. As the Bank of England availed itself by degrees of the encouragement given to extend itself over the provinces, the country Bankers, as was but natural, took alarm at this invasion of their respective circles, and cried out with a loud voice against the formidable competition 2 set up against them. They met, took counsel together, and remonstrated with the Government and the Parliament. I take by way of statement of their case, the resolutions passed by them in December 1827, and submitted to the Premier, Lord Goderich, (now Earl Ripon) and Mr. Herries, then chancellor of the exchequer, on their behalf by Sir John, now Lord Wrottesley, their chairman. Resolved,

"That the late measures of the Bank of England in the establishment of branch Banks, have the evident tendency to subvert the general Banking system, that has long existed throughout the country, and which has grown up with and been adapted to the wants and conveniences of the public.

"That it can be distinctly proved that the prosperity of trade, the support of agriculture, the increase of general improvement, and the productiveness of the national revenue; are intimately connected with the existing system of Banking.

"That the country Bankers would not complain of rival establishments, founded upon equal terms; but they do complain of being required to compete with a great company, possessing a monopoly and exclusive privileges.

"That if this great corporation, conducted by directors who are not personally responsible, succeed by means of these exclusive advantages in their apparent object of supplanting the existing Banking establishments, they will thereby be rendered masters of the circulation of the country; which they will be enabled to contract or expand according to their own will; and thus be armed with a tremendous power and influence, dangerous to the stability of property, and the independence of the country."

2 The part in which the shoe pinched most severely was this. The rate of discount with country Bankers used to be five per cent., and a commission of five or six shillings. The Bank of England, a better security, did the same business at four per cent. without a commission. Down to these terms, accordingly, the private Bankers were obliged to come, or look on idly while the people went to the cheaper market.

The private Bankers continued to agitate and remonstrate, but effected no essential change in their position, by these proceedings. In point of fact their day had passed. The Bank of England gradually increased the number of its branches, and the only relief obtained by its opponents was the act 9 Geo. IV. c. 23, which enabled them to compound for their stamp duties, upon the terms enjoyed by the Bank of England; and to include in their composition bills drawn on London at twenty-one days date3.

3 The case made out in this particular was a strong one. It was shown that the stamp duty on a bill drawn at twenty-one days on London, was to the private Banker 3s. 6d. and to the Bank of England only 5d.; and that a circulation throughout the year of 10,000l. in bills of exchange of 201. each, subjected the Bank of England to a payment in lieu of stamp duty of only 35l. and the country Banker to a payment of 650l.

Meantime the progress of joint-stock Banking, without being surprisingly rapid, was extensive and considerable. It appears from an analysis, made by Mr. Gilbart, managing director of the London and Westminster Bank, of the list of joint-stock Banks, returned to the Commons, committee of 1836, that their number had increased up to that period at the following rate.

The total number of partners in these eighty-nine companies was 24,938, distributed thus: -

The same Committee ascertained that the paid-up capital of these companies was then 6,295,678l.; the aggregate amount of their circulation for the quarter ending June, 1836, 3,588,064l.; and their average dividends, 7l. 18s. Mr. Gilbart has since computed the paid-up capital of the joint-stock Banks in 1836 as high as ten millions sterling4. Parliamentary returns had already shown that, in the quarter ending January, 1833, there were only forty such establishments in existence, and that their circulation in that year was only 1,315,301l. At this period, therefore, the general statistics of the subject were sufficiently ample and authoritative.

So marked an extension of the new system was sure to challenge remarks and censure. I am far from regarding the efforts made at the time to direct the public eye to the circumstance, as unwise or improper. Some joint-stock Banks soon justified the pains that were then taken to prejudice the community against the general body. I feel, however, that although the large addition made to the number of joint-stock Banks in 1836 (thirty to fifty-eight), and the great increase in the total circulation of the whole body (amounting, in the short space of two years and a half, to 2,272,763l., which was at the rate of nearly cent. per cent. per annum), deserved serious attention; yet that there were facts to account, in some measure, for the rise, or, rather, to show that it was not really so great as it appeared to be, which were not immediately taken notice of. The truth is, that many of these establishments, though new as joint-stock companies, were not new as Banks; several of them had been founded upon private Banks, which took advantage of the times, and preferred to engraft themselves upon the new system rather than enter into competition with it. If I may hazard a guess from memory, I should say that, of the eighty-nine joint-stock Banks in 1836, from twenty to thirty were newly-modified private Banks.

4 Commons' Report, 1841, question 1368.